The U.S. economy has been showing glimmers of hope. Unemployment has fallen for five straight months. And fears of financial catastrophe in Europe have abated. Steve Inskeep sat down with our regular economic commentators - David Wessel, of the Wall Street Journal; and Zanny Minton Beddoes, of The Economist magazine - to ask if we might be getting beyond our economic troubles.

STEVE INSKEEP, HOST:

Well, let's start with the basics. What basics tell you where we are right now?

DAVID WESSEL: It feels like after a long period of malaise, the economy is starting to pick up a little bit of momentum. We still have a long way to go, but things are going in the right direction. Claims for unemployment insurance - new claims are down to levels we haven't seen since March 2008. Manufacturing seems to be perking up. And the kind of mood of the country, whether it's consumers or the stock market, is beginning to feel a little more encouraging.

ZANNY MINTON BEDDOES: I agree with David that there is a sense of optimism in the country. I think, particularly, you see it in financial markets; you see it in the stock market. But, you know, I hate to sound a note of caution in this, but we've kind of been here before in the sense that at the beginning of last year - and indeed, the beginning of the year before last - we started the year with a lot of optimism. That was then dashed, both because of external factors and oil price shock - and, in fact, because internally, you know, we hadn't worked our way through the hangover.

And I think the big question now is, are these very real glimmers? And the one that encourages me the most is the labor market. Improved job growth is a really good sign. It means that we may be able to get onto this virtuous cycle of better job growth, more income, more sustainable spending leading to more investment and more job growth.

INSKEEP: Well, let me ask about one of those things that you mentioned. You said the last couple of times it looked like the economy was improving, we hadn't worked our way through the hangover. You're talking about a hangover of debt - people hadn't paid off their debts.

BEDDOES: Absolutely. And after a big asset bust that we had - big housing bust - history tells us that recoveries tend to be very slow, and very subdued, for a long time. And so we realize it's going to be a long slog but, you know, hangovers eventually end. And the question is: Are we, you know, near the beginning of the end of this hangover? And I think by some metrics, things have improved.

INSKEEP: David Wessel.

WESSEL: I think the biggest new worry on the horizon is oil prices and gasoline prices. We know that the economy is always sensitive to higher energy prices. It's like a tax on business and consumers. And because of all the troubles in the Middle East, there's very little reason to hope that it'll fall. That's one of the things that Zanny mentions that could knock us off course again - as, of course, could the continuing troubles in Europe.

BEDDOES: I think in the past few months, the Europeans have successfully turned their festering sore - they've covered it with a massive, great Band-Aid.

(SOUNDBITE OF LAUGHTER)

BEDDOES: And it's now, basically, gone from being an acute crisis to being a chronic one. And that, actually, I think, really does mean that in the short-term, we can take off the table the risk of a financial catastrophe in Europe.

INSKEEP: If the catastrophe is just delayed, even if it was going to happen sometime, is there still a great benefit for the United States? Because Americans get a few more months to get the economy churning again, and we might get to the point where Europe couldn't drag us down into another Great Recession.

WESSEL: Yes, I think so. I mean, catastrophes delayed are always better than catastrophes that arrive. And I think that we're seeing two things. One is, if we have enough momentum, we are less susceptible to problems in Europe. And, of course, the other thing about what's going on in Europe is the U.S. government is able to borrow extraordinary sums of money at very, very low interest rates.

And at a time when we don't have a lot going for us, it's good for the government to be able to, for instance, finance the payroll tax holiday - which they've extended through the end of the year - without running up a big interest tab. It means lower mortgage rates, which is beginning to seep, to help the housing industry a little bit.

And so it's a plus, but I don't think that we can really have strong, robust return to full employment growth without some cooperation from the rest of the world economy.

INSKEEP: One last thing - and you've alluded to this a little bit. The hard-to-measure intangibles - people's confidence, people's feeling about the economy; if people feel good about the economy, they might borrow more, spend more, invest more, create more activity, regardless of what the rational situation would dictate. Are we getting to a point where those intangibles might be in our favor, rather than running against us?

BEDDOES: I think they might be, but I think they're very fragile. And I think that right now, we have seen improvements in consumer confidence in the past few months. You know, the stock market is a very important part of this. If you're looking in your portfolio and it's going up, you feel better about it. But I think - and this is where we get back to gasoline prices and to oil prices - if you just continue to have a big, substantial rise in gas prices, it could more than undue that very quickly.

WESSEL: Larry Summers, the former Treasury Secretary, once said that you know a period of crisis is over when the surprises are consistently on the up side. And we've been through a period where for so long, the surprises have been negative. The fact that they're positive now does kind of breed a self-fulfilling cycle of confidence that could be very important.

INSKEEP: David Wessel of the Wall Street Journal, thanks for coming by.